Lower sales, delayed projects pull down DMCI profit by 25%
Engineering and construction conglomerate DMCI Holdings Inc. of the Consunji family recorded a 25-percent drop in first-quarter earnings to P5.6 billion on lower commodity prices, among a slew of factors.
In a stock exchange filing on Wednesday, DMCI said revenues fell by 17 percent to P27.4 billion on lower coal, nickel and electricity prices, “lower construction accomplishments” and higher real estate sales cancellations.
“Market prices pose a significant challenge for us this year,” DMCI chair and president Isidro Consunji said in a statement, adding: “We do not expect coal, nickel and electricity prices to recover to the highs of the past two years due to shifts in demand-supply dynamics.”
Earnings of Semirara Mining and Power Corp. dropped by 27 percent to P3.7 billion on weaker market prices of coal.
Real estate unit DMCI Homes contributed P879 million to the group’s earnings, a 12-percent decline due to lower revenues.
Meanwhile, lower fuel expenses and higher electricity demand nearly doubled the income of DMCI Power to P264 million from P134 million.
Engineering and construction subsidiary DM Consunji Inc. saw a 64-percent drop in profit to P98 million as project delays pulled down earnings.
DMCI Mining recorded a net loss of P22 million, a reversal of its P473-million net income in the same period last year, due to lower nickel grades and weaker selling prices.
Last month, DMCI acquired cement manufacturer Cemex Holdings Philippines Inc. for $305.6 million.
Consunji hopes to turn around Cemex’s P2-billion net loss by next year as he expects “ongoing capacity expansion and the clear synergies it brings” to the DMCI group to generate profit.
He said Semirara could bring in “more affordable” coal for the cement maker, while Cemex could provide around 400,000 metric tons of cement for DMCI Homes.
DMCI had priced its acquisition of Cemex at P1.42 per share, way below the latter’s initial public offering price of P10.75 eight years ago. This values Cemex at P19.5 billion, lower than its P25.6-billion market capitalization.
